Breach of contract gives
rise to a cause of action for specific performance or for rescission.A suit for such breach is not capable of
pecuniary estimation; hence, the assessed value of the real estate, subject of
the said action, should not be considered in computing the filing fees.Neither a misjoinder nor a non-joinder of
parties is a ground for dismissal of an action, because parties may be dropped
or added at any stage of the proceedings.

The Case

Before us is a Petition
for Review on Certiorari under Rule 45, assailing the Orders dated
September 8, 2000 and November 21, 2000, promulgated by of the Regional Trial
Court (RTC) of Pasig City, Branch 263.[1] The first assailed
Order disposed as follows:

WHEREAS, [respondent corporation], x x x is the absolute owner, x
x x of a parcel of land situated at Kay-biga, Paranaque, Metro Manila covered
under Transfer Certificate of Title No. (S-30409) (partially cancelled by TCT
Nos. 110001 to 110239) and particularly described as follows:

A parcel of land (Plan Psu-80206, Case No. 290, G.L.R.O. Record
No. 2291), situated in the Barrio of Kay-biga, Municipality of Paranaque,
Province of Rizal.Bounded on the NE.,
by properties of Eulogio Cruz and Isidro Alano; on the E., by property of Justo
Bernardo; on the SE., by properties of Marcelo Nofuente and Lorenzo Molera; on
the SW., by properties of Higino and Pedro P. Lopez; on the W., by property of
Odon Rodriguez; and on the NW., by properties of Evaristo de los Santos and
Pastor Leonardo.....; containing an area of ONE HUNDRED SEVEN THOUSAND AND
FORTY SEVEN (107,047) SQUARE METERS, more or less.

WHEREAS, [respondent corporation] decided to engage the assistance
of [petitioner] and x x x herein called the FACILITATOR for the purpose of
facilitating and arranging the recovery of the property in question, as well as
the financing of such undertakings necessary in connection thereto;

WHEREFORE, premises considered and of the mutual covenants of the
parties, they have agreed, as follows:

1.The FACILITATOR undertakes to effect the
recovery of the property subject hereof, including the financing of the
undertaking, up to the registration of the same in the name of [respondent
corporation], except any and all taxes due;

2.The FACILITATOR shall be responsible for
whatever arrangements necessary in relation to the squatters presently
occupying [a] portion of the property, as well as the legitimate buyers of lots
thereof;

3.As compensation for the undertaking of the
FACILITATOR, [she] shall be entitled to Twenty [Percent] (20%) of the total
area of the property thus recovered for and in behalf of [respondent
corporation].

Armed with Board
Resolution No. 01, Series of 1997,[6] which had
authorized her to represent the corporation, Luz Baylon Ponce entered into a
February 11, 1997 Deed of Undertaking with a group composed of petitioner,
Wenifredo P. Forro, Nicanor Radan Sr. and Atty. Prospero A. Anave.The Deed states the following:

WHEREAS, the UNDERTAKER [respondent corporation] solicited,
engaged and hereby voluntarily acknowledges the assistance of certain persons,
in recovering, arranging and financing the undertaking up to completion/consummation
of the same;

WHEREFORE, considering the foregoing premises, and the mutual
covenants of the parties, the UNDERTAKER hereby unconditionally and irrevocably
[c]ommit[s] and [u]ndertake[s], as follows:

1. To pay or compensate the following persons, based on the gross
area of the afore-described parcel of land or gross proceeds of the sale
thereof, as the case may be, to wit:

Rebecca T. Cabutihan------------------------------------20%

Wenifredo P. Forro-----------------------------------10%

Nicanor Radan, Sr.------------------------------------ 4%

Atty. Prospero A. Anave-----------------------------------2.5%

TOTAL-----------------------------------
36.5%

2. Execute a Deed of Assignment unto and in favor of each of the
persons above-mentioned corresponding to their respective shares in the subject
parcel of land or in the proceeds thereof;

3. This Undertaking as well as the Deed of Assignment above-stated
shall be effective and binding upon the heirs, successors-in-interest, assigns
or designates of the parties herein.[7]

An action for specific
performance with damages was filed by petitioner on October 14, 1999 before the
RTC of Pasig City, Branch 263.She
alleged:

[6.] [Petitioner] accomplished her undertakings under the subject
Agreement and the Undertaking.So in a
letter dated 18 April 1997, x x x, [respondent corporation] was informed
accordingly thereof.Simultaneously,
[petitioner] demanded upon [respondent corporation] to execute the
corresponding Deed of Assignment of the lots in the subject property, as
compensation for the services rendered in favor of the [respondent
corporation].The subject letter was
duly received and acknowledged receipt, by then Acting Corporate Secretary of
the [respondent corporation].

[7.] [Respondent corporation] failed and refused to act on x x x
said demand of [petitioner].Hence,
[she] sent a letter dated May 8, 1997, to the Register of Deeds for Paranaque,
to inform x x x said Office of x x x [her] claim x x x;

[8.] x x x [T]he subject property was already transferred to and
registered in the name of [respondent corporation] under Transfer Certificate
of Title No. -123917-, of the Registry of Deeds for Paranaque City x x x;

xxxxxxxxx

[10.] With x x x said title of the property now in the possession
of the [respondent corporation], [petitioner] is apprehensive that the more
that [she] will not be able to obtain from [respondent corporation], compliance
with the afore-stated Agreement and Undertaking, to the extreme detriment and
prejudice of [petitioner] and her group, x x x;

xxxxxxxxx

[12.] Then in a letter,[8]dated
10 September 1999, [petitioner] through counsel sent to [respondent
corporation] a Formal Demand, to comply with its obligation x x x but x x x
[respondent corporation] did not heed the demand. x x x.[9]

Petitioner prayed, inter
alia, that respondent corporation be ordered to execute the appropriate
document assigning, conveying, transferring and delivering the particular lots
in her favor.The lots represented
compensation for the undertakings she performed and accomplished, as embodied
in the Agreement.

Respondent then filed a
Motion to Dismiss, alleging the following:

5. Because of the troubled situation obtaining at the management
level of [respondent corporation], the sale between [respondent corporation]
and PCIB regarding the Fourth Estate Subdivision was not registered with the
Register of Deeds office, although [respondent corporation] continued holding
the deed of sale over the Fourth Estate Subdivision.

6.A group of persons led by one Wilfredo Maghuyop,
including herein [petitioner], Wenifredo Forro, Nicanor Radan, and others,
taking advantage of the management mess at [respondent corporation], tried to
grab ownership of the [respondent corporation], and with use of fraud, cheat,
misrepresentation and theft of vital documents from the office of [respondent
corporation], succeeded in filing with the Securities and Exchange Commission
false papers and documents purporting to show that the Articles of
Incorporation of [respondent corporation] had been amended, installing Maghuyop
as president of [respondent corporation].It was on these occasions that [petitioner] and her companions x x x,
with use of fraud, stealth, tricks, deceit and cheat succeeded in letting Luz
Baylon Ponce sign a so-called Deed of Undertaking by virtue of which
[respondent corporation] is duty-bound to give to [petitioner], Forro, Radan
and Atty. Prospero Anave 36.5% of the land area of the Fourth Estate
Subdivision as compensation for alleged services and expenses made by these
people in favor of [respondent corporation].They also caused said x x x Maghuyop to sign an Agreement with
[petitioner] expressing an obligation on the part of [respondent corporation]
to give a big part of the land x x x to [petitioner].These Agreement and Deed of Undertaking are being made by
herein [petitioner] as her causes of action in the present case.

Wilfredo Maghuyop was a stranger to [respondent corporation], and
he was an impostor used by [petitioner] and her companions to barge into the
management of [respondent corporation] for the purpose of stealing and creating
an obligation against [respondent corporation] in their favor.

7. But Luz Baylon Ponce, whose signature appears on the instrument
denominated as Deed of Undertaking, vehemently denies that she signed said
instrument freely and voluntarily.She
says that Wenifredo Forro and Nicanor Radan were once real estate agents of
[respondent corporation] who promised to help sell lots from her project
Villaluz II Subdivision located [in] Malibay, Pasay City.According to Luz Baylon Ponce, the Board of
Directors of [respondent corporation] negotiated with Forro and Radan for the
latter to sell units/lots of Villaluz II Subdivision, and to help obtain a
financier who would finance for the expenses for the reconstitution of the lost
title of the Fourth Estate Subdivision situated [in] Sucat, Paranaque
City.Shortly thereafter, these two men
resigned from [respondent corporation] as agents, after they manipulated the
signing of x x x said Deed of Undertaking by Luz Baylon Ponce on February 11,
1997.The latter is an old woman 80
years of age.She is weak, has x x x
poor sight, and is feeble in her mental ability.Forro and Radan inserted the Deed of Undertaking among the
papers intended for application for reconstitution of [respondent
corporations] title which these men caused Luz Baylon Ponce to sign, and she
unknowingly signed the Deed of Undertaking. x x x.[10]

In the Motion, respondent
sought the dismissal of the Complaint on the grounds of (1) improper venue, (2)
lack of jurisdiction over the subject matter, and (3) nonpayment of the proper
docket fees.Specifically, it
contended:

8. That venue is
improperly laid

xxxxxxxxx

(b) In other words, the present case filed by [petitioner] is for
her recovery (and for her companions) of 36.5% of [respondent corporations]
land (Fourth Estate Subdivision) or her interest therein.x x x therefore, x x x the present case
filed x x x is a real action or an action in rem.

(c) x x x [Following] Section 1, Rule 4 of the Rules of Court, as
amended x x x the present case should have been filed by [petitioner] with the
proper court in Paranque City which has jurisdiction over the x x x Fourth
Estate Subdivision because said subdivision is situated in Paranaque City.Since [petitioner] filed the present case
with this x x x [c]ourt in Pasig City, she chose a wrong venue x x x.

xxxxxxxxx

9.That the [c]ourt
has no jurisdiction over the subject matter of the claim

xxxxxxxxx

(c) x x x Wenifredo P. Forro, Nicanor Radan, Sr. and Atty.
Prospero A. Anave are not named as plaintiffs in the complaint.[Petitioner] x x x is not named as
representative of Forro, Radan and Anave by virtue of a Special Power of Attorney
or other formal written authority.According
to the Rules, where the action is allowed to be prosecuted or defended by a
representative or someone acting in a fiduciary capacity, the beneficiary shall
be included in the title of the case and shall be deemed to be the real party
in interest (Sec. 3, Rule 3, Rules of Court, as amended x x x).

xxxxxxxxx

10.That a condition
precedent for filing the claim has not been complied with

xxxxxxxxx

(b) Obviously, [petitioner] has not paid the docket or filing fees
on the value of her land claim x x x.Thirty-six percent (36%) x x x is P180,000,000.00, x x x.[11]

Ruling of the
Trial Court

The RTC ruled that the
allegations in the Complaint show that its primary objective was to recover
real property.Equally important, the
prayer was to compel respondent to execute the necessary deeds of transfer and
conveyance of a portion of the property corresponding to 36.5 percent of its
total area or, in the alternative, to hold respondent liable for the value of
the said portion, based on the prevailing market price.The RTC further ruled that, since the suit
would affect the title to the property, it should have been instituted in the
trial court where the property was situated.[12]

Furthermore, the action
was filed only by petitioner.There was
no allegation that she had been authorized by Forro, Radan and Anave to
represent their respective shares in the compensation.

Finally, since this case
was an action in rem, it was imperative for petitioner to pay the
appropriate docket or filing fees equivalent to the pecuniary value of her
claim, a duty she failed to discharge.Consequently, following Manchester Development Corp. v. Court of
Appeals,[13]the trial court
never acquired jurisdiction over the case.

Whether or not the dismissal of the [C]omplaint was in accordance
with the pertinent law and jurisprudence on the matter.[15]

She argues that the RTC
erred in dismissing her Complaint on the grounds of (1) improper venue, (2)
non-joinder of necessary parties, and (3) non-payment of proper docket fees.

This Courts
Ruling

The Petition is
meritorious.

First Issue:

Proper Venue

Maintaining that the
action is in personam, not in rem, petitioner alleges that the
venue was properly laid.The fact that
she ultimately sought the conveyance of real property not located in the
territorial jurisdiction of the RTC of Pasig is, she claims, an anticipated
consequence and beyond the cause for which the action was instituted.

On the other hand, the
RTC ruled that since the primary objective of petitioner was to recover real
property -- even though her Complaint was for specific performance and damages
-- her action should have been instituted in the trial court where the property
was situated, in accordance with Commodities Storage & Ice Plant Corp.
v. Court of Appeals.[16]

We agree with
petitioner.Sections 1 and 2, Rule 4 of
the Rules of Court provide an answer to the issue of venue.[17] Actions affecting
title to or possession of real property or an interest therein (real actions),
shall be commenced and tried in the proper court that has territorial
jurisdiction over the area where the real property is situated.On the other hand, all other actions, (personal
actions) shall be commenced and tried in the proper courts where the plaintiff
or any of the principal plaintiffs resides or where the defendant or any of the
principal defendants resides.

In Commodities Storage
cited earlier, petitioner spouses obtained a loan secured by a mortgage
over their land and ice plant in Sta. Maria, Bulacan.Because they had failed to pay the loan, the mortgage was
foreclosed and the ice plant auctioned.Before the RTC of Manila, they sued the bank for damages and for the
fixing of the redemption period. Since the spouses ultimately sought redemption
of the mortgaged property, the action affected the mortgage debtors title to
the foreclosed property; hence, it was a real action.[18] Where the action
affects title to the property, it should be instituted in the trial court where
the property is situated.[19]

In National Steel
Corp. v. Court of Appeals,[20]the Court held that
an action in which petitioner seeks the execution of a deed of sale of a
parcel of land in his favor x x x has been held to be for the recovery of the
real property and not for specific performance since his primary objective is
to regain the ownership and possession of the parcel of land.

However, in La Tondea
Distillers, Inc. v. Ponferrada,[21]private respondents
filed an action for specific performance with damages before the RTC of Bacolod
City.The defendants allegedly reneged
on their contract to sell to them a parcel of land located in Bago City - - a
piece of property which the latter sold to petitioner while the case was
pending before the said RTC.Private
respondent did not claim ownership but, by annotating a notice of lis
pendens on the title, recognized defendants ownership thereof. This Court
ruled that the venue had properly been laid in the RTC of Bacolod, even if the
property was situated in Bago.

In Siasoco v. Court of
Appeals,[22]private respondent filed a case for specific
performance with damages before the RTC of Quezon City.It alleged that after it accepted the offer
of petitioners, they sold to a third person several parcels of land located in
Montalban, Rizal.The Supreme Court
sustained the trial courts order allowing an amendment of the original
Complaint for specific performance with damages. Contrary to petitioners
position that the RTC of Quezon City had no jurisdiction over the case, as the
subject lots were located in Montalban, Rizal, the said RTC had jurisdiction
over the original Complaint.The Court
reiterated the rule that a case for specific performance with damages is a
personal action which may be filed in a court where any of the parties reside.

A close scrutiny of National
Steel and Ruiz reveals that the prayers for the execution of a Deed
of Sale were not in any way connected to a contract, like the Undertaking in
this case.Hence, even if there were
prayers for the execution of a deed of sale, the actions filed in the said
cases were not for specific performance.

In the present case,
petitioner seeks payment of her services in accordance with the undertaking the
parties signed.Breach of contract
gives rise to a cause of action for specific performance or for rescission.[23] If petitioner had
filed an action in rem for the conveyance of real property, the
dismissal of the case would have been proper on the ground of lack of cause of
action.

Second Issue:

Non-Joinder of Proper Parties

Petitioner claims that
she was duly authorized and empowered to represent the members of her group and
to prosecute their claims on their behalf via a Special Power of Attorney
executed by Forro, Radan and Anave.Besides,
she argues that the omission of her companions as plaintiffs did not prevent
the RTC from proceeding with the action, because whatever judgment would be
rendered would be without prejudice to their rights. In the alternative, she
avers that the trial court may add or drop a party or parties at any stage of
the action and on such terms as are just.

The RTC ruled that there
was no allegation anywhere in the records that petitioner had been authorized
to represent Forro, Radan and Anave, who were real parties-in-interest with
respect to their respective shares of the 36.5 percent claim.Such being the case, the trial court never
acquired jurisdiction over the subject matter of their claims.

Again, we side with
petitioner.Neither a misjoinder nor a
non-joinder of parties is a ground for the dismissal of an action.Parties may be dropped or added by order of
the court, on motion of any party or on the courts own initiative at any stage
of the action.[24] The RTC should
have ordered the joinder of such party, and noncompliance with the said order
would have been ground for dismissal of the action.

Although the Complaint
prayed for the conveyance of the whole 36.5 percent claim without impleading
the companions of petitioner as party-litigants, the RTC could have separately
proceeded with the case as far as her 20 percent share in the claim was
concerned, independent of the other 16.5 percent.This fact means that her companions are not indispensable parties
without whom no final determination can be had.[25] At best, they are
mere necessary parties who ought to be impleaded for a complete determination
or settlement of the claim subject of the action.[26]The non-inclusion of a necessary party does not
prevent the court from proceeding with the action, and the judgment rendered
therein shall be without prejudice to the rights of such party.[27]

Third Issue:

Correct Docket Fees

Petitioner insists that
the value of the real property, which was the subject of the contract, has
nothing to do with the determination of the correct docket or filing fees.

The RTC ruled that
although the amount of damages sought had not been specified in the body of the
Complaint, one can infer from the assessed value of the disputed land that it
would amount to P50 million.Hence, when compared to this figure, the P210 paid as docket fees
would appear paltry.

We hold that the trial
court and respondent used technicalities to avoid the resolution of the case
and to trifle with the law.True,
Section 5, Rule 141 of the Rules of Court requires that the assessed value of
the real estate, subject of an action, should be considered in computing the
filing fees.But the Court has already
clarified that the Rule does not apply to an action for specific performance,[28] which is
classified as an action not capable of pecuniary estimation.[29]

Besides, if during the
course of the trial, petitioners 20 percent claim on the Fourth Estate
Subdivision can no longer be satisfied and the payment of its monetary
equivalent is the only solution left, Sunlife Insurance Office, Ltd. v.
Asuncion[30]holds as follows:
Where the filing of the initiatory pleading is not accompanied by payment of
the docket fee, the court may allow payment of the fee within a reasonable time
but in no case beyond the applicable prescriptive or reglementary period.

WHEREFORE, the Petition is hereby GRANTED, and
the assailed Orders REVERSED and SET ASIDE.The case is REMANDEDto
the court of origin which is ordered to PROCEEDwith deliberate
speed in disposing of the case.No
costs.

[17]SEC. 1. Venue of real actions. - Actions
affecting title to or possession of real property, or interest therein, shall
be commenced and tried in the proper court which has jurisdiction over the area
wherein the real property involved, or a portion thereof, is situated.

xxxxxxxxx

SEC.2. Venue of personal actions. - All
other actions may be commenced and tried where the plaintiff or any of the
principal plaintiffs resides, or where the defendant or any of the principal
defendants resides, or in the case of a non-resident defendant where he may be
found, at the election of the plaintiff.

[24] 11, Rule 3 of the
Rules of Court, provides: SEC. 11. Misjoinder and non-joinder of parties. -
Neither misjoinder nor non-joinder of parties is ground for dismissal of an
action.Parties may be dropped or added
by order of the court on motion of any party or on its own initiative at any
stage of the action and on such terms as are just.Any claim against a misjoined party may be severed and proceeded
with separately.

[25]7, Rule 3 of the
Rules of Court, states: SEC 7. Compulsory joinder of indispensable parties.
- Parties in interest without whom no final determination can be had of an
action shall be joined either as plaintiffs or defendants.

[26]8, Rule 3 of the
Rules of Court, provides: SEC. 8. Necessary party. A necessary party
is one who is not indispensable but who ought to be joined as a party if
complete relief is to be accorded as to those already parties, or for a
complete determination or settlement of the claim subject of the action.